I. Agreement Formation With a Partnership
Under Pennsylvania law, binding a partnership to a contract requires proof of three things:
(1) mutual assent, (2) sufficiently definite terms, and (3) consideration. Courts apply an objective theory of contracts, focusing on what the parties said and did—not their later characterizations of the agreement.
Importantly, a contract may be fully enforceable as between the parties who assent to it, even if it does not ultimately bind a partnership or other entity. Where a party purports to act on behalf of a partnership, enforceability against the partnership turns on principles of agency and statutory authority.
Under Pennsylvania’s enactment of the Uniform Partnership Act, 15 Pa. Cons. Stat. § 8321, a partner’s act binds the partnership only if it is taken in the ordinary course of partnership business or, if outside that scope, is authorized by the other partners. Acts outside the ordinary course—such as transferring ownership interests—require actual authority. Thus, while an agreement may otherwise satisfy the elements of contract formation, it cannot bind a partnership unless it complies with these statutory requirements.
The Superior Court’s decision in Lascoli v. Fahr Masonry Contractors, 2026 PA Super 59, No. 437 WDA 2025 (Pa. Super. Ct. Mar. 25, 2026), illustrates the interaction between these principles. There, Adam Lascoli believed he had secured a right to a ten percent equity interest in the defendant partnership after nearly two decades of involvement.
He had not.
II. Factual Background
The dispute arose from an employment relationship that included discussions of compensation, role, and potential ownership.
On April 19, 2007, Lascoli signed a one-page employment agreement with Thomas A. Fahr Masonry Contractors (the “Partnership”). The agreement was executed by Lascoli and Thomas Fahr, who signed as “managing partner.”
The parties negotiated and memorialized core aspects of their arrangement, including:
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- Financial terms,
- Lascoli’s ongoing role in the business,
- Ownership interests, and
- Related obligations.
These negotiations produced a written document—variously described as a term sheet or letter agreement—that captured the essential structure of the deal. The document:
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- Set forth specific compensation terms,
- Defined Lascoli’s role,
- Addressed ownership structure, and
- Imposed obligations on both sides.
At the same time, the parties contemplated executing more formal agreements in the future.
Two provisions became central to the dispute:
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- The 10% Provision: Promised a 10% ownership interest after ten years of service, with an additional 1% annually thereafter.
- The “Fahr’s Interest” Provision: Provided that, upon Fahr’s death, Lascoli would receive Fahr’s one-third ownership interest, with “terms to be discussed.”
Lascoli worked for the Partnership from 2007 through 2021, including a period of part-time work, before leaving to start a competing business prior to Fahr’s death.
When the relationship deteriorated, one side argued the document was merely preliminary and non-binding, while the other maintained it was an enforceable contract.
III. Lack of Authority to Bind the Partnership
The Superior Court drew a critical distinction: even assuming the agreement satisfied the elements of contract formation, it did not bind the partnership with respect to ownership.
Fahr conceded that he lacked authority under the partnership agreement to grant an ownership interest. The court further rejected any claim of apparent authority.
The reasoning followed directly from the Uniform Partnership Act:
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- Hiring employees falls within the ordinary course of business.
- Transferring ownership interests does not.
Under 15 Pa. Cons. Stat. § 8321(b), acts outside the ordinary course bind the partnership only if authorized by the other partners. A single partner cannot unilaterally alter the ownership structure of the partnership.
Accordingly, any purported agreement regarding equity failed—not necessarily because no contract existed in the abstract, but because the alleged agent lacked authority to bind the partnership to that aspect of the deal.
IV. Indefiniteness and Ongoing Negotiation
The court also found that certain provisions were too indefinite to enforce. The “Fahr’s Interest” clause—stating that key terms were “to be discussed”—reflected ongoing negotiation rather than a final agreement.
This underscores a separate limitation on enforceability: even where parties intend to be bound, a contract must include sufficiently definite essential terms. Open-ended language on material points may render a provision unenforceable.
V. The Central Issue
The case presented a familiar question:
Can a term sheet or preliminary writing create a binding contract where the parties anticipate executing more formal agreements later?
VI. The Court’s Analysis
A. Intent to Be Bound
The court began with intent, assessed objectively. The document’s structure and level of detail supported the conclusion that the parties intended to be bound at the time of execution.
B. Definite Terms
The court reiterated that a contract need not resolve every conceivable issue. It is sufficient if the essential terms are agreed upon. Here, the agreement addressed the core economic and operational terms of the relationship.
C. Future Documentation
The expectation of later, more formal agreements did not negate present contract formation. Pennsylvania law distinguishes between:
- An unenforceable “agreement to agree,” and
- A binding agreement that the parties intend to formalize later.
D. Course of Performance
The parties’ conduct after execution reinforced the existence of a binding agreement.
VII. Holding
The Superior Court held that the parties formed a binding contract based on the term sheet, notwithstanding their intent to execute more formal documentation later.
However, that holding did not extend to provisions that purported to bind the partnership beyond the scope of a partner’s authority or that lacked sufficient definiteness.
VIII. Practical Implications
- Enforceability vs. Authority Are Distinct Questions
A contract may be enforceable between individuals who assent to it, yet still fail to bind a partnership if the statutory requirements of the Uniform Partnership Act are not satisfied. - “Preliminary” Documents Can Bind
Labels such as “term sheet” or “letter agreement” do not control. If essential terms are agreed upon and intent to be bound is present, courts will enforce the agreement. - Ownership Transfers Require Authority
Agreements affecting partnership ownership fall outside the ordinary course of business and require actual authorization under 15 Pa. Cons. Stat. § 8321(b). - Drafting Discipline Matters
To avoid unintended liability, practitioners should:
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- Clearly state what event must occur to make an agreement “final” and binding (e.g., “no agreement will take place until reduced to a final writing endorsed by all parties.”)
- Identify conditions precedent (such as execution of definitive agreements), and
- Avoid including fully developed substantive terms unless binding effect is intended.
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- Objective Evidence Governs
Courts will continue to rely on objective manifestations of assent, not one party’s self-serving disclaimers.
IX. Conclusion
Lascoli v. Fahr Masonry Contractors reinforces a straightforward principle: when parties agree on essential terms and act accordingly, a binding contract may exist—even in the absence of formal documentation.
But enforceability is only part of the analysis. Where a party seeks to bind a partnership, the inquiry must also satisfy the Uniform Partnership Act. Without proper authority, even a fully formed agreement cannot impose obligations on the partnership itself.
For practitioners, the lesson is clear: term sheets and early-stage agreements are not legally harmless—and authority to bind the entity is just as important as agreement on the terms.
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